* FTSE closes up 0.6 pct at 6,851.75 points
* FTSE within touching distance of January peak
* Mining stocks boosted by JP Morgan upgrade
By Sudip Kar-Gupta
LONDON, May 12 (Reuters) - A rise in heavyweight mining stocks lifted Britain’s top equity index on Monday back towards its highest level since early 2000.
The blue-chip FTSE 100 index closed 0.6 percent or 37.18 points higher at 6,851.75 points - within touching distance of a peak of 6,867.42 reached in January, which was close to its highest levels since early 2000.
Mining stocks added the most points to the FTSE, with Rio Tinto rising 4.8 percent while Antofagasta and BHP Billiton rose 3.5 and 2.7 percent respectively, after investment bank JP Morgan raised its rating on the sector to “overweight” from “underweight”.
Although the mining sector has been dogged by concerns about an economic slowdown in China, the world’s biggest metals consumer, JP Morgan pointed to signs of a rebound in Chinese economic activity.
Earlier this month, data showed China’s exports and imports returned to slight growth in April as orders to the United States and European Union surged. That was a positive signal for the world’s second-largest economy after a weaker-than-expected start to 2014.
“Clearly such a bullish upgrade on the mining sector from JP Morgan is always going to have a knock on effect on the FTSE,” said IPR Capital director Steven Mayne.
“The rally in the miners has also been helped by a strengthening in copper, as well as an uplift on gold that has again bounced upwards from support.”
Macquarie strategist Daniel McCormack said concerns over Ukraine, where Kiev authorities have clashed with pro-Moscow supporters, could curb the FTSE’s progress in the near-term.
Mayne also saw more value in the actual commodities themselves, such as gold and silver, than in equity indexes or individual mining shares.
Mayne added he was tempted to “short” the FTSE - to bet on it retreating in the near-term - while taking up positions to bet on more gains in metal prices.
But McCormack was more bullish on the FTSE over the longer term, with many investors expecting the FTSE to hit a record high of 7,000 points later this year. The index is up by around 1.4 percent since the start of 2014.
“Longer term, there is still quite a bit of upside to come because I do think that earnings will improve,” he said. “We have still got scope for an earnings-driven rally on a 12- to 18-month view.” (Additional reporting by Atul Prakash Editing by Catherine Evans)